Correlation Between Manufactured Housing and Northwest Bancshares

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Can any of the company-specific risk be diversified away by investing in both Manufactured Housing and Northwest Bancshares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Manufactured Housing and Northwest Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manufactured Housing Properties and Northwest Bancshares, you can compare the effects of market volatilities on Manufactured Housing and Northwest Bancshares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Manufactured Housing with a short position of Northwest Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manufactured Housing and Northwest Bancshares.

Diversification Opportunities for Manufactured Housing and Northwest Bancshares

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Manufactured and Northwest is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Manufactured Housing Propertie and Northwest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Bancshares and Manufactured Housing is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Manufactured Housing Properties are associated (or correlated) with Northwest Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Bancshares has no effect on the direction of Manufactured Housing i.e., Manufactured Housing and Northwest Bancshares go up and down completely randomly.

Pair Corralation between Manufactured Housing and Northwest Bancshares

Given the investment horizon of 90 days Manufactured Housing Properties is expected to generate 8.98 times more return on investment than Northwest Bancshares. However, Manufactured Housing is 8.98 times more volatile than Northwest Bancshares. It trades about 0.06 of its potential returns per unit of risk. Northwest Bancshares is currently generating about 0.02 per unit of risk. If you would invest  129.00  in Manufactured Housing Properties on July 9, 2022 and sell it today you would earn a total of  41.00  from holding Manufactured Housing Properties or generate 31.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.68%
ValuesDaily Returns

Manufactured Housing Propertie  vs.  Northwest Bancshares

 Performance (%) 
       Timeline  
Manufactured Housing 
Manufactured Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Manufactured Housing Properties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Manufactured Housing sustained solid returns over the last few months and may actually be approaching a breakup point.

Manufactured Price Channel

Northwest Bancshares 
Northwest Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Northwest Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental drivers, Northwest Bancshares may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Northwest Price Channel

Manufactured Housing and Northwest Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Manufactured Housing and Northwest Bancshares

The main advantage of trading using opposite Manufactured Housing and Northwest Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manufactured Housing position performs unexpectedly, Northwest Bancshares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Northwest Bancshares will offset losses from the drop in Northwest Bancshares' long position.
Manufactured Housing vs. Amazon Inc
The idea behind Manufactured Housing Properties and Northwest Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Northwest Bancshares vs. Amazon Inc
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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